How to rescind a car purchase contract

Cheryl HinneburgUpdated April 17, 2017

Buying a new car is usually a joyous time, but sometimes, even after the contract is signed, there are reasons for rescinding it. Things can happen that can cause you to want to get out of a contract that will likely last years. Or sometimes the dealer is dishonest when making the sale and you do not find out right away. Any of these reasons can cause you to want out of a vehicle contract.

Cancel the contract quickly. You have the right to legally rescind your contract under certain conditions according to Section 43 in the Motor Car Trader's Act.

Study the provisions of the Motor Car Trader's Act so that you understand your legal rights. By law, you are allowed three days to cancel your contract even after you have already signed the contract. This is called a "cooling off" period.

Rescind the contract as close to the three-day period as possible if all of the promised conditions have not been met by the seller or when you discover that the vehicle is not up to the standards you initially agreed upon.

Give notice in writing that you want to terminate your agreement. It is the best option to hand-deliver this notice to the dealer, and it is also a good idea to bring someone along to witness your serving of the letter.

Return the car when you deliver the letter of termination. The dealer might argue and demand that you do not leave it, but once the letter of termination has been delivered, you can no longer legally drive the car. So leave it with the keys.

State in your letter if you are rescinding using the grounds of the "cooling off" period. There might be a penalty fee involved that has to be paid, depending on the dealer, the state you reside in or the reason for rescinding.

Tip

Always get as close to the three-day period as possible to reduce the risk of getting stuck with the vehicle.

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About the Author

Cheryl Hinneburg has been a freelance writer for five years. In addition to the regular clients that she works for, Hinneburg also writes regularly for Demand Studios and Associated Content, and is a provider for eLance. She is an award-winning poet and is currently working on a Master of Science with a certificate in substance abuse counseling at Capella University.